Beer Companies Foam Up to Take Over the World; Colorado Ditch Day for Marijuana Tax; Poor Findings from U.S. Census Bureau

Sudsy…

Image courtesy of Danilin/FreeDigitalPhotos.net

Image courtesy of Danilin/FreeDigitalPhotos.net

A frothy beer merger seems to be brewing for two of the biggest beer makers in the world. Rumor has it that ABInBev and SABMiller are throwing around the idea of possibly joining foamy forces to create the biggest beer company. Ever. The move could also result in forming one of the biggest food and beverage companies. Ever. If the merger goes through, the new company would control a mind-numbing half of the entire beer market’s total profits. The new entity will also become one of the top ten biggest companies in the world, with Procter & Gamble and Nestle SA trailing behind. How a beer company’s market cap could surpass that of companies which make toothpaste and chocolate is beyond me. But I digress. ABInBev owns a lot beers you know like perennial classics, Budweiser, Corona and Stella Artois. But it also owns a lot that you may not have heard of like Antarctica, which is brewed…wait for it…in Brazil. Together with the malodorous Cass beer from South Korea, AbInBev owns over 40 different brews from all over the world. However it’s the market in Africa that has eluded this beer behemoth all this time. Hence, it’s looking to expand with SABMiller who already has quite the handle on that continent. Even though this is still all just talk, news of the potential merger sent shares of SABMiller up 23%.

On a high note…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

There’s nothing like a good old-fashioned accounting error to generate marijuana sales. Because of a glitch in Colorado State Tax laws an automatic suspension of new taxes was conveniently triggered. The marijuana tax was the lucky winner and was met with great enthusiasm by the state’s marijuana users who regularly shell out an extra 25% in taxes for the stuff. It all started because Colorado under-estimated tax collection from last year. When that happens…poof…25% in sales and excise taxes magically disappears for one special day. Today being that day. Mason Tvert, director of communications for the Marijuana Policy Project said, “It’s crazy how much revenue our state used to flush down the drain by forcing marijuana sales into the underground market…It’s even crazier that so many states are still doing it…” Amen. Also interesting to note (well, to me anyway) is that sales of marijuana outpaced those of alcohol and tobacco. With marijuana raking in tax revenues of $70 million, alcohol only managed to eke out a paltry $42 million in tax revenue. Marijuana users spend approximately $1,800 a year on the stuff while consumers spend $450 on alcohol and just $315 a year on tobacco.

On a low note…

Image courtesy of  Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Just when you think things are starting to look fiscally up, the U.S. Census Bureau steps in to to ruin the day. The bad news is that the median household income has been going down. As in, not up. In 2013, median income in the United States was $54,462. That number should have gotten bigger. But alas, 2014 brought with it a median income of $53,657. Which makes no sense since the economy seems to be recovering and employment is hovering at seven year lows (even though wages haven’t been picking up any speed). If that’s not bad enough, the poverty rate has also gone up from 14.5% in 2013 to 14.8% in 2014. Apparently, the poverty rate and the median income are not considered statistically significant, at least according to the Census Bureau researchers who presumably, make more than $53,657 a year. Just saying. And because it wouldn’t be any fun not to inject some politics into this discussion, the Democrats are rejoicing since the number of people roaming the streets without health insurance fell from 42 million people to 33 million. In an attempt to sap their mojo, however, Republican Paul Ryan, who chairs the House of Representatives Ways and Means Committee, advised Dems not to pat themselves on the back just yet, since clearly their efforts to fight poverty aren’t working.

Twitter Buyout Hoax Sends Shares Up; Colorado’s Schools Getting Built on Pot; June Consumer Spending Blues

Nothing to get all tweeted up about…

Image courtesy of  winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

It’s the big news that wasn’t. A story about a $31 billion Twitter buyout made its way online on a website that looked suspiciously like it came straight out of Bloomberg headquarters. Except that it didn’t. A Bloomberg spokesperson said that the story was “fake and appeared on a bogus website that was not affiliated with Bloomberg.”In fact, the website was created just a few days ago, was rife with typos and referred to Twitter’s former CEO Dick Costolo as “Richard ‘Dick’ Costello.”  Talk about rookie mistakes. It’s too bad the story was false as the news caused shares of Twitter to spike more than 8%. I guess this means Wall Street digs the idea of a Twitter buyout. It’s not the first time a bogus story caused a stock to artificially inflate. Avon Products had a similar situation months back when a company calling itself PTG Capital Partners filed a bid to buy the company for $8 billion. Now, Avon’s great and all but that price seemed a bit too high for a company that hadn’t had a good quarter in too long of a time. This, of course, raised some red flags and now the perp behind the phony filing is facing the legal wrath of the SEC.

High-er education…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Ever since Colorado decided to legalize recreational marijuana, schools in the Rocky Mountain State have been emerging victorious. A special fund from marijuana sales, set aside for Colorado schools, has been setting records thanks to a 15% excise tax. In 2014, $13.3 million in pot taxes for school construction was raised. But in just the first five months of 2015, that fund already surpassed $13.7 million. Part of the reason for the huge price increase is because marijuana businesses received a one time tax exempt transfer of medical plants. But it also helps that there are three different taxes imposed on marijuana, including a 2.9% sales tax, a 10% special marijuana sales tax and a 15% excise tax on wholesale marijuana transfers. Unfortunately, pot still has its haters and those opponents are coming out in full force using a racketeering law – that was initially established to bring down organized crime – by suing not just pot businesses, but their banks, their bond companies and even their accountants. Now if only there was a way for marijuana businesses to sue the pot opponents and level the playing field.

June gloom…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Well it looks like the Fed won’t be rushing to hike rates anytime soon all thanks to the Commerce Department’s latest report for June. In case you missed it, consumer retail sales were pretty depressing. The numbers were weak and that is a problem since consumer spending accounts for 70% of the economy, suggesting that the economy isn’t growing as it should. Sales of automobiles and other goods took quite the hit as would-be spenders are playing it cautiously about spending their hard-earned cash lest they need it for a rainy day. The fiscal crisis of 2008 is still managing to spook a lot of people even though hiring is pretty decent and the labor market is fairly healthy. To be fair, though, wages are kind of flat and everyone would appreciate a little rise on that front. Even the revised growth rate for May was disappointing coming in at 1.0% as opposed to the 1.2% that was first reported. Here’s hoping July brings better fiscal news.

It’s All About the Bonus; Colorado’s State Budget Gone to Pot; Vera Bradley’s Headed Overseas

Fat cats…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Good news, that is, if you work on Wall Street. According to new data from New York State Comptroller Thomas DiNapoli, bonuses are up 3% in broker-dealer firms. Those bonuses managed to increase even though profits at most Wall Street firms took major hits. Together, all those lucky bonus takers took home (or are expected to take home) a very grand total of $28.5 billion, with the average earner scoring $172,860. They might have even taken home more but all those legal settlements stemming from the firms’ pernicious little roles in the 2008 fiscal crisis managed to put a crimp in profits. The securities industry also added 2,300 jobs, presumably ones that come with bonuses too. Has your jaw hit the floor yet?  Even all those pesky new regulatory changes couldn’t stop those bonuses from rising. So why exactly might this information make the New York State comptroller so giddy? Because Wall Street accounts for 19% of New York State’s revenue and when the tide is high, all boats rise.

Speaking of bonuses…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

The amount of money that keeps pouring into Colorado’s state budget from marijuana sales just keeps getting…higher. No matter how you feel about legalizing recreational marijuana, there’s no denying its fiscal benefits. Sales of cannabis have helped the state rake in close to $9 million…just in the month of January. That was a whopping 163% increase over January of 2014. First, there is a a fee imposed on businesses that sell marijuana. All those businesses paid about $1 million in fees just for the privilege of selling the stuff. In sales tax receipts alone the state took in $3.5 million on a 10% sales tax for recreational pot. Colorado also puts a 15% excise tax on the stuff with funds from that going toward school improvement projects. There is a joke in there somewhere but I’ll stay away from it.

Just not that into you…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Handbag and accessories maker Vera Bradley took a nasty 16% hit on its stock today as it announced its abysmal fourth quarter earnings. Revenue fell 3% from a year ago to $157 million. But its that 13% drop in its net income, falling to $17.3 million, that is leaving a nasty mark. Blaming it on the fact that Vera Bradley can’t seem to attract new customers, CEO Robert Wallstrom said “overall business trends remain difficult.” Well, for Vera Bradley, anyway.  Not only is the company closing up shop on its New Haven, Indiana plant where 250 people will be left without a job, but Vera Bradley will now take the necessarily evil step of manufacturing its products overseas, since it’s apparently 90% cheaper to do so.  The company, started in 1982, went public in 2010 at $16 a share. After hitting a high of close to $50, back in 2011, the stock has been taking a vicious little dive, hitting all-time lows. All this comes two weeks after Vera Bradley named Olympic gold medalist Meryl Davis as its celebrity ambassador.

Argghh! Portugal, Tons and Tons of Pot! and Guess Who Got Blacklisted

Portugal blame game…

Image courtesy of nirots/FreeDigitalPhotos.net

Image courtesy of nirots/FreeDigitalPhotos.net

If you’re just as annoyed as I am about the havoc being wreaked on the markets today, then join me in pointing the finger at Portugal. One of the country’s biggest financial firms, Espirito Santo International, is very rudely causing headaches, and not just in Europe, when it curiously delayed payment to some of the entities holding onto its debt securities. Delaying payment is bad enough but then throw in the fact that an audit done in May showed “irregularities” in its accounting and you’ve got yourself a major problem – for the firm, the investors and even the country of Portugal itself. The company blamed some of the issues on an IT mistake. In the meantime the firm sought judicial protection against its creditors. Hmmm. Since when do IT mistakes require judicial protection?

Pot-tastic study…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Results of a new study have just been released. But it’s not just the results that are newsworthy but the study itself since it’s the first one done, post-pot legalization, using actual sales data instead of survey responses from people whose sobriety might be questionable. Now for the drum roll, please: “This study finds total marijuana demand to be much larger than previously estimated.” Ya think? In fact, demand for residents of the open-minded state of Colorado came in at 121 metric tons for its residents and 9 more tons for enthusiastic tourists. The study was conducted by the Marijuana Inventory Tracking System (MITS – and don’t forget that “S”) by Colorado’s Department of Revenue. The study also found a third of the state’s pot consumers consume their weed less than once a month and that visitors account for 44% of sales in the Denver area. On average, an ounce of marijuana will set you back about $220. But you’re worth it.

Closed for American business…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

In case you were in the market for components to add to your personal stash of surveillance drones, you might want to check with the US Treasury first to see if your vendor of choice has been blacklisted by Uncle Sam. And in case that vendor was Stars Group Holding, well then, you’re going to have to take your business elsewhere. Unfortunately, Stars Group Holding is among those blacklisted because it likes to play nice and chillax with members of terrorist organization, Hezbollah. Coincidentally (or not) both Hezbollah and Stars Group Holding hold court in Lebanon. Stars Group helped the anti-humanitarian organization pick up parts for unmanned aerial vehicles  – UAV’s if you’re in the know, which were used for Syria’s murderous Assad Regime and to spy on the democratic and diplomatic state of Israel, which Hezbollah is hell bent on annihilating. Americans are banned from doing business with the company that “…relied on false-end user certificates, mislabeled air waybills, and other fraudulent methods.” Charming, huh?

Washington State’s New High, Uber Vs. NYC Cabbies and Bed Bath Not Above and Beyond

On a high note…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

A big shout out goes to Washington today as it becomes the second state to legalize selling and using recreational marijuana. Medical use of the buzz-inducing plant has already been legal there for quite some time. While you might wonder if Washington is doing this out of the kindness of its heart or to increase revenue of the snacking industry, you might also consider the $200 million in taxes and fees related to marijuana that the state expects to rake in over the next four years. “I think they’ve got a good handle on what they’re doing,” says Andrew Freedman, Colorado’s Director of Marijuana Coordination. I wonder what he listed as skills and relevant experience on his resume. Colorado, which had the financial prescience to legalize marijuana much earlier this year, has already generated tens of millions of dollars for the state. Tourists and residents of Washington can expect some shortages and unusually high – no pun intended (well maybe just a little)  – prices until the state can work out the supply and demand kinks of the newly legalized substance but it should be worth it as experts say that legalization leads to better pot potency.

Uber Vs. New York Cabbies…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Uber made a big in your face decision to temporarily reduce prices on its Uber X service in New York City. The app, which is still fighting numerous regulatory hurdles in numerous cities, wants to take a big bite out of the Big Apple’s market share. Uber’s alleged logic is that even in a city where hailing a cab is easier than looking at your smartphone, if it can lure customers away with cheaper fares, than those customers will just get used to using the app, even if and when those fares go back up. And in case you were wondering, yes, the folks behind Uber are probably taking a huge hit by dropping its prices by 20%. But the company figures that’s what it takes to compete against the already reasonably priced NYC taxis. No doubt that $1.2 billion in funding it just received probably softens the blow. That and the fact that the company is currently valued at $17 billion.

Buybuy shares…

Image courtesy of John Kasawa/FreeDigitalPhotos.net

Image courtesy of John Kasawa/FreeDigitalPhotos.net

Bed Bath & Beyond announced plans to buy back $2 billion in shares over the next fiscal year. Perhaps all those coupons I regularly use are responsible for the the company’s stock slump. But the board seems to think (and hopes) a buyback will help alleviate that and cause shares to go back up. The board clearly feels confident about the company and its long term growth and potential. Sounds like a middle school report card. The company, which also owns Buy Buy Baby and Cost Plus World Market, and has about 1500 stores, has seen its stock tank this year by around 26%. It wouldn’t be right if some of that blame wasn’t attributed to bad weather. But culprits, like Amazon and other e-commerce sites have been giving the chain some fierce competition as well. And even though the company did post a profit this quarter, it was still down 8% over last year’s gains.

 

 

Seeking Qualified BudTender, Things Are Looking Ulta-fabulous and Feeling Not So Energetic

Applicants must be proficient in marijuana (use?)…

Image courtesy of scottchan/FreeDigitalPhotos.net

Image courtesy of scottchan/FreeDigitalPhotos.net

Think you’ve got what it takes to be a great budtender? In what must have been the most well-attended career event…well…ever, Denver, Colorado put on its first marijuana industry job fair, the CannaSearch Job Fair, hoping to attract qualified candidates for a variety of positions. Some of those positions even require actual degrees and credentials, like say, accountants, marketing execs and tech experts. Oh yeah and sellers, too. No mention on samplers, though. Potential employees had to be at least 21 years of age and marijuana use was a no-no at the fair.

There’s something different about you…

Image courtesy of koratmember/FreeDigitalPhotos.net

Image courtesy of koratmember/FreeDigitalPhotos.net

Haven’t you been spending a lot of time AND money at Ulta Salon? No? Not you? Impossible since their earnings shot up about 14% more compared to this same quarter last year – taking Wall Street by surprise. The cosmetics and beauty retailer, conveniently located at a strip mall near you, beat analysts’ expectation by two cents. A pittance to you but not on Wall Street where it pays to beat The Street. And that, my well coiffed-friend, takes a lot of make-up and hair product.

Just when you thought it was safe to go back in the water…

ID-100108591

You remember that big old mess (I am being flip, of course) that BP caused in the Gulf of Mexico back in 2010? You know, the Deepwater Horizon blowout? The fatal one that also led to a massive oil spill that caused epic environmental damage? BP is still waiting to hear if a court will find them grossly negligent. But that’s not the news here. What is news is that they must be the luckiest company. Ever. Because the US government is still planning on doing business with them and they’ve even reached a deal with environmental protection authorities for new drilling rights – once again in the Gulf of Mexico.  After all, BP US did invest $50 billion in the last five years. John Mingé, head of BP America said, “Today’s agreement will allow America’s largest energy investor to compete again for federal contracts and leases.” Isn’t that just the best?